State-Owned Enterprises Are the Source Of Corruption In Ukraine


Volodymyr Dubrovsky, CASE Ukraine`s senior economist, commented to ‘Hromadske Radio’ outlet on a statement by the Finance Minister that state companies are planned to be sold without State Property Fund`s supervision.

Partly, the State Property Fund really did its job well. However, partly it could not perform its function. It is not just the State Property Fund: the institution was established in contrast to the (post)-Soviet ministries that remained Soviet because they insisted that the property should be kept by the state. It means they must be owned by the same ‘red bosses’ who were there in Soviet times. There will be no privatization and progressive movement.

In such conditions, the State Property Fund was established. It was the structure that supposed to be bureaucratic in its essence but had to oppose other bureaucratic structures.


When it came to mass privatization, it was conducted quickly on a large scale, but with numerous violations, problems. In addition, this is very organic, if we look at the nominal and real property. As the USSR collapsed, ‘red bosses’ actually received full control over these enterprises. A complete mess began because they officially did not belong to them. They were not liable as owners, and profits were privatized. From an economic point of view, it turned out that profits got private, losses got public. Moreover, if the company goes bankrupt, the state takes it on bail. This led to the collapse of our economy in 1993-1994.


So far, ‘criminal enforcers’ who control all financial flows supervise those state-owned enterprises, which formally belong to the entire nation.

Such ‘feeders’ are, in fact, divided between political forces. As a new political landscape appears, these political players set up their own ‘enforcers’. This creates political corruption, poisons the political class, and absolutely gives us nothing as owners. We control them not much more than we would nominally control our apartment, which is located somewhere in Bakhchisaray (Crimea), for example.

September 27, 2017